Celsius reveals a $1.2bn balance sheet hole

On Thursday , cryptocurrency lending platform Celsius Network has filed for bankruptcy in the United States. This comes about a month after the company stopped cashing out from its customers.

Now, according to new documents released by the company, Celsius’ liabilities exceed its balance sheet assets by nearly $1.2 billion. In other words, this is the size of the “gap” in the company’s balance sheet.

Celsius has $5.5 billion in liabilities

The documents show that as of July 13, the company held $4.3 billion in assets. Meanwhile, liabilities amounted to nearly $5.5 billion.

Celsius also reported having about US$600 million in CEL tokens which, at the time of writing, is priced at $0.79.

Despite the unpleasant news for the company and its customers, the token price has jumped.

According to Alex Mashinsky, CEO of Celsius, the company’s problems are due to a combination of bad investments, market conditions and an inability to manage its rapid growth.

Celsius Network case

The documents also show that the company’s largest unsecured creditor (which does not enjoy preference in the event of bankruptcy) is Pharos USD Fund SP, registered in the Cayman Islands.

As Bloomberg reported in a report, Pharos USD Fund SP is affiliated with Lantern Ventures, which in turn is associated with the venture capital firm Alameda Research, owned by Sam Bankman-Fried, founder of cryptocurrency exchange FTX.

In early July Bankman-Fried considered the possibility of acquiring Celsius amid its financial problems.

However, sources said a huge hole in the balance sheet was the reason the billionaire executive pulled out of the deal. At the time, there is talk of a US$ 2 billion hole, below the real value according to the documents.

But before that, Celsius secured a $108 million loan from FTX.

Finally, the new documents also show that the company only raised $600 million in funding in 2021, instead of $750 million.

Celsius was founded in 2017 by its CEO Alex Mashinsky and has grown rapidly by promising high interest rates. The company has won over high-profile investors, including the Canadian pension fund Caisse (CDPQ). However, the market downturn hit the company hard, which has now filed for bankruptcy.